Govt Faces 7th Pay Commission’s Pay Gap Problem

July 5, 2016

Govt Faces 7th Pay Commission’s Pay Gap Problem

New Delhi: The Modi government’s decision to accord the 7th Pay Commission recommendation to hike salaries and allowances for central government employees has met with strong resistance from central government employees’ trade unions, including the RSS-affiliated Bharatiya Mazdoor Sangh (BMS).

The Union Cabinet approved the recommendations made by the 7th pay commission on June 29, which is likely to see a higher increase in the basic pay by average 14.29 percent, which is the lowest in 70 years.

The minimum monthly pay has been increased from Rs 7000 to Rs 18,000.

The central government employees Unions leaders on the same day said the approved hike was lowest in many decades and were not in sync with inflation. They also said it is “totally disappointing and beats logic”.

Accordingly, they rejected the 7th Pay Commission approved by the government and threatened to go on indefinite strike from 6 am, 11 July.

The central government employees unions have been demanding Rs 26,000 as minimum pay instead of Rs 18,000 approved by the government based on the 7th Pay Commission’s recommendations.

“When you are doing away with DA in the new system, the hike may be just Rs.2,250,” another union leader said.

Under pressure from the unions, the government has indicated that it may increase the minimum pay of central government employees beyond the Rs.18,000 suggested by the 7th Pay Commission, seeking to defuse a strike threat.

Acoordingly, Finance Minister Arun Jaitley met with representatives of central government employees unions at Home Minister Rajnath Singh’s house for two hours till 11pm, a day after the cabinet cleared 7th Pay Commission award for its employees.

Jaitley, Rajnath Singh, Railways Minister Suresh Prabhu and Minister of State for Railways Manoj Sinha attended the meeting and assured unions leaders of central government employees that their demand would be looked into.

“The ministers called us and we have been assured that the minimum pay issue is going to be referred to one of two committees that the government is setting up to rectify any anomalies in the pay commission recommendation implementation,” Shiv Gopal Mishra, General Secretary of the National Joint Council Action (NJCA), a confederation of 3.3 million government employees, told reporters after the meeting.

The increasing the minimum pay will change the salary fitment factor. If the minimum pay is hiked from Rs.18,000 to even Rs.25,000, the fitment factor will be higher than the 2.57 times approved by the government based on the pay commission recommendations.

If the 2.57 fitment formula is tinkered with, then salary and pension in general for all central government employees will go up.

The Cabinet ditto with the 7h Pay Commission recommendations, the commission recommended for raising minimum pay to Rs 18,000 per month from current Rs 7,000 while the maximum pay, drawn by the Cabinet Secretary, was recommended Rs 2.5 lakh per month from current Rs 90,000. For the Secretaries it was recommended at Rs 2.25 lakh as against Rs 80,000 currently.

All pay commissions made up pay gap between lower paid employees and top officers from second Pay Commission 1:41 ratio to Sixth pay commission 1:12.

The first pay commission was recommended pay of the top bureaucrats 41 times higher than the government employees at the bottom. The top bureaucrats were given salary Rs 2,263 while the lowest earning employees got Rs 55.

Subsequent pay commissions reduced the ratio of pay between lowest earning employees and top bureaucrats from 1:41 in 1947 to about 1:12 in 2006.

The 7h Pay Commission increased the pay gap between the minimum and maximum from existing 1:12 to 1:13.8

The pay gap increases employee’s turnover and work-related illness, with all the associated economic consequences.

The bureaucrats with high pay are generally happier, healthier and a better place to live for almost everyone in them compare to the lower earning employees.

A pay gap is calculated as the ratio of the pay of the highest paid employee of an organisation to the pay of the average or lowest paid employee in that organisation.

Speculations were rife that the central government employees unions may defer the July 11 indefinite strike after government heeded to their demand of increasing minimum pay to over Rs 25,000 from Rs 18,000 fixed after considering the recommendations of the 7th Pay Commission.

Under the fitment formula, the government multiplied the minimum wage of Rs 7,000 fixed in the last pay commission with 2.57 and arrived at a minimum pay of Rs 18,000 per month.

The employees are demanding for the fitment formula of 3.68, which will result in minimum monthly pay of Rs 25,760.